EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 15, 2005 by and between XXXXXX
XXXXXX, LTD., a Delaware corporation with offices at 00-00 Xxxxxxx Xxxxxx, Xxxx
Xxxxxx Xxxx, X.X. 00000 (the "Company"), and XXXXXXXX XXXXX, an individual
residing at 00 Xxxxxx Xxxxx Xxxx, Xxxxxx Xxxxxxx, X.X. 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, subject to the terms and conditions hereinafter set forth, the
Company wishes to employ the Executive in the position set forth herein and the
Executive wishes to accept such employment.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth in this Agreement, the
parties hereby agree as follows:
Section 1. Employment. The Company hereby employs Executive, and
Executive hereby accepts such employment, as the Company's Chief Operating
Officer, subject to the terms and conditions set forth in this Agreement.
Section 2. Duties. The Executive shall perform such duties as may
reasonably be assigned to him from time to time by the Chief Executive Officer
of the Company and agrees to abide by all By-laws, policies, practices,
procedures or rules of the Company. During the term of this Agreement, the
Executive shall devote all of his business time to the performance of his duties
hereunder unless otherwise authorized by the Board of Directors. Without
limiting any policies, practices, procedures or rules of the Company otherwise
applicable, the Executive also agrees that he shall not take personal advantage
of any business opportunities which arise during his employment and which may
benefit the Company. All material facts regarding such opportunities must be
promptly reported to the Chief Executive Officer for consideration by the
Company.
Section 3. Term Of Employment. The term of the Executive's employment,
unless sooner terminated in accordance with the provisions set forth herein,
shall be for a period of three (3) years commencing July 1, 2005 through June
30, 2008 (the "Initial Term"). The Term shall be automatically renewed for
successive one-year terms (each, a "Renewal Term" and the Initial Term and any
such Renewal Term, collectively, the "Term") on the same terms set forth herein
unless at least 180 days prior to the expiration of the Initial Term or 90 days
prior to the expiration of any Renewal Term, either party notifies the other
party in writing that he or it is electing to terminate this Agreement at the
expiration of the then-current Term. If the Company notifies the Executive in
writing of its intention not to renew this Agreement (other than For Cause or
Total Disability as set forth in Sections 5.3 and 6), the Executive shall
receive in cash an amount equal to the then-current Base Salary prorated from
the expiration of the then-current Term through 90 days after the expiration of
the then-current Term, payable to the Executive at such regular weekly, biweekly
or semi-monthly time or times as the Company makes payment of its regular
payroll in the regular course of business.
Section 4. Compensation Of Executive.
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4.1 Salary. The Company shall pay to the Executive a base salary
of Four Hundred Twenty Five Thousand ($425,000) dollars per annum, subject to
increases in accordance with the terms of the last sentence of this Section 4.1
(the "Base Salary"), less such deductions as shall be required to be withheld
by applicable law and regulations. The Base Salary payable to the Executive
shall be paid at such regular weekly, biweekly or semi-monthly time or times as
the Company makes payment of its regular payroll in the regular course of
business. Commencing on July 1, 2006, and on each anniversary thereafter during
the Term, the Base Salary shall be increased by 5% of the then-current Base
Salary; provided, that if the Company's net earnings before interest expense and
taxes ("EBIT"), as derived from the Company's financial statements included in
its periodic reports on Forms 10-K and 10-Q, for such 12-month period from July
1 to June 30 increases by at least 5% over EBIT in the preceding 12-month
period, then the Base Salary shall be increased by 10% of the then-current Base
Salary.
4.2 Bonuses.
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(a) Signing Bonus. On the date of this Agreement, the
Company shall pay to the Executive a cash bonus equal to One Hundred Thousand
($100,000) dollars, less such deductions as shall be required to be withheld by
applicable law and regulations (the "Signing Bonus").
(b) Performance Bonus. In respect of the Company's fiscal
year ending December 31, 2005, the Company shall pay to the Executive a cash
bonus (payable within 75 days after December 31) equal to the greater of (i)
Fifty Thousand ($50,000) dollars and (ii) three percent (3%) of the increase in
the Company's EBIT for such fiscal year over the EBIT of the immediately prior
fiscal year as derived from the financial statements of the Company for such
fiscal year. In respect of each of the Company's fiscal years during the Term
after the fiscal year ending December 31, 2005, the Company shall pay to the
Executive a cash bonus in accordance with clause (ii) above.
4.3 Deferred Cash Compensation. For each 12-month period of the
Term, the Company shall reserve and set aside 25% of the Executive's Base
Salary, it being understood and agreed that on June 30, 2008 and on each June 30
thereafter during the Term, the Company shall pay to the Executive in cash an
amount equal to 25% of the Executive's aggregate Base Salary paid during the
Initial Term or applicable Renewal Term, as the case may be; provided, that the
Executive then remains in the employ of the Company. If the Executive is
terminated pursuant to Section 5.4, the Executive shall receive a pro-rata
portion of the deferred cash compensation (i.e., 25% of the Executive's
aggregate Base Salary paid through the date of such termination).
4.4 Expenses. The Company shall, at the direction of the
Executive, either reimburse the Executive for, or directly pay the cost of, the
lease of an automobile during the Term and all usual expenditures in connection
therewith (i.e. fuel, insurance, parking, customary maintenance and repairs) in
an amount not to exceed One Thousand Two Hundred ($1,200) dollars per month,
less such deductions as shall be required to be withheld by applicable law and
regulations.
4.5 Benefits. The Executive shall be entitled to participate in
such pension, profit sharing, group insurance, options plans, hospitalization
and group health and benefit plans and all other benefits and plans as the
Company provides from time to time to its senior executives. In addition, the
Company shall pay term life insurance premiums on behalf of the Executive of
approximately Three Thousand Five Hundred ($3,500) dollars per year, less such
deductions as shall be required to be withheld by applicable law and
regulations.
Section 5. Termination.
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5.1 Death. This Agreement shall terminate upon the death of the
Executive; provided, however, that the Company shall continue to pay to the
estate of Executive the Base Salary (exclusive of deferred compensation) and all
other benefits as set forth herein for the 12-month period immediately
subsequent to the date of the Executive's death.
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5.2 Termination Due To Total Disability. Subject to Section 6.2
hereof, in the event the Executive is discharged due to his "Total Disability"
(as this term is defined below), then this Agreement shall be deemed terminated
and the Company shall be released from all obligations to the Executive with
respect to this Agreement, except obligations accrued prior to such termination
and those obligations provided in Section 6.2 hereof.
5.3 Termination For Cause; Resignation.
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(a) In the event that the Executive is discharged "For
Cause" (as defined below) or the Executive resigns for any reason, this
Agreement shall be deemed terminated and the Company shall be released from all
obligations to the Executive with respect to this Agreement, except obligations
accrued prior to such termination. If the Executive is discharged For Cause, he
shall repay to the Company the full amount of the Signing Bonus and if the
Executive resigns for any reason, the Executive shall repay to the Company a
pro-rata portion of the Signing Bonus for the portion of the Initial Term that
the Executive did not fulfill due to such resignation, in each case, promptly
(but in any event within 30 days) (it being understood that the Company may
offset such amount against any payments otherwise due to the Executive).
(b) As used herein, the term "For Cause" shall only mean:
(i) a deliberate and intentional breach by the Executive of a substantial and
material duty and responsibility under this Agreement that is not remedied, if
capable of being remedied, within 30 days after receipt of written notice by
certified mail return receipt requested from the Company specifying such breach;
(ii) the Executive's conviction of, or pleading guilty or nolo contendere to,
any crime constituting a felony in the jurisdiction involved; (iii) the
conviction of the Executive of any crime involving moral turpitude; or (iv)
gross negligence or willful misconduct in the conduct of the Executive's duties
or willful refusal or inability to perform such duties as may be delegated to
the Executive which are consistent with the Executive's position as in effect
just prior to such delegation, and such conduct is not corrected by the
Executive within 30 days following receipt by the Executive of written notice
from the Board of Directors or the Chief Executive Officer, such notice to state
with specificity the nature of the breach, failure or refusal, gross negligence
or willful misconduct related to the Executive's employment with the Company.
5.4 Termination Other Than For Cause, Death or Due To Total
Disability. Subject to the terms and conditions of this Agreement, the Company
may terminate the Executive other than For Cause upon 30 days' prior written
notice to the Executive by certified mail return receipt requested ("Notice of
Termination"). In the event the Executive is discharged other than For Cause or
due to his death or Total Disability, then such termination shall be effective
30 days after the Executive's receipt of the Notice of Termination (the
"Termination Date"). Such Notice of Termination shall properly set forth the
Company's agreement to pay to the Executive an amount equal to the sum of (x)
the Executive's Base Salary that would have been paid by the Company pursuant to
Section 4.1 hereof for the longer of the remainder of the then-current Term or 6
months and (y) the cash bonus payable to the Executive pursuant to Section
4.2(b) prorated from the commencement of the then-current Term through the
Termination Date; provided, however, that the Executive shall cease to be
entitled to any further payments under this Section 5.4 if he shall be employed
on a full-time basis by another company or entity. Such amount shall be payable
to the Executive by the Company at such regular weekly, biweekly or semi-monthly
time or times as the Company makes payment of its regular payroll in the regular
course of business.
5.5 Termination Upon a Change of Control.
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(a) If a Change of Control (as defined below) occurs, the
Company or the Executive may terminate this Agreement within 90 days of such
Change of Control and this Agreement shall be deemed terminated as of the
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effective date of the event constituting the Change of Control and the Executive
shall receive in cash, within 10 days of termination, an amount equal to three
(3) times the total compensation received by the Executive pursuant to Sections
4.1, 4.2(a), 4.2(b) and 4.5 of this Agreement for the preceding 12-month period
ending on the last previous December 31st, except that in lieu of the actual
Base Salary component received during such period under Section 4.1, there shall
be substituted the annual Base Salary to which the Executive was entitled as of
the date of the Executive's termination.
(b) In the event that any payment (or portion thereof) to
the Executive under Section 5.5(a) is determined to constitute an "excess
parachute payment," under Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended, the following calculations shall be made:
(i) The after-tax value to the Executive of the
payments under Section 5.5(a) without any reduction; and
(ii) The after-tax value to the Executive of the
payments under Section 5.5(a) as reduced to the maximum amount (the "Maximum
Amount") which may be paid to Executive without any portion of the payments
constituting an "excess parachute payment".
If after applying the agreed upon calculations set forth above, it is
determined that the after-tax value determined under clause (ii) above is
greater than the after-tax value determined under clause (i) above, the payments
to the Executive under Section 5.5(a) shall be reduced to the Maximum Amount.
(c) "Change Of Control" as used herein, shall mean:
(i) When any "person" as defined in Section 3(a)(9)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as
used in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act, but excluding the Company or any subsidiary
or any affiliate of the Company or any employee benefit plan sponsored or
maintained by the Company or any subsidiary of the Company (including any
trustee of such plan acting as trustee) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities; or
(ii) When, during any period of 24 consecutive
months, the individuals who, at the beginning of such period, constitute the
Board of Directors (the "Incumbent Directors") cease for any reason other than
death to constitute at least a majority thereof; provided, however, that a
director who was not a director at the beginning of such 24-month period shall
be deemed to have satisfied such 24-month requirement (and be an Incumbent
Director) if such director was elected by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually (because they were directors at the
beginning of such 24-month period) or through the operation of this proviso; or
(iii) The occurrence of a transaction requiring
stockholder approval for the acquisition of the Company by an entity other than
the Company or a subsidiary or an affiliate of the Company through purchase of
assets, or by merger, or otherwise.
Section 6. Disability
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6.1 Total Disability. In the event that after the Executive has
failed to have performed his regular and customary duties for a period of 90
consecutive days or for any 180 days out of any 360-day period and before
Executive has become "Rehabilitated" (as herein below defined), a majority of
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the members of the Board of Directors of the Company (exclusive of the
Executive) may vote to determine that the Executive is mentally or physically
incapable or unable to continue to perform such regular and customary duties of
employment and upon the date of written notice to Executive by certified mail
return receipt requested of such majority vote, Executive shall be deemed to be
suffering from a "Total Disability". As used herein, the term "Rehabilitated"
shall mean such time as Executive is willing, able and commences to devote his
time and energies to the affairs of the Company to a reasonable extent and in a
similar manner that he did prior to this disability.
6.2 Payment During Disability. In the event the Executive is
unable to perform his duties hereunder by reason of a disability, prior to the
time such disability is deemed a Total Disability in accordance with the
provisions of Section 6.1 above, the Company shall continue to pay the Executive
his benefits including salary pursuant to this Agreement during the continuance
of any such disability. Upon a determination of any Total Disability pursuant to
the provisions of Section 6.1 above, the Company shall pay to the Executive his
Base Salary pursuant to this Agreement for the 12-month period immediately
subsequent to the date of determination of Total Disability.
Section 7. Vacation. The Executive shall be entitled to vacation of 4
weeks per year during which period all benefits including salary shall be paid
in full. The Executive shall take his vacation at such time as the Executive and
the Company shall determine is mutually convenient said vacation shall be
cumulative or taken in extra pay.
Section 8. Disclosure Of Confidential Information. The Executive
recognizes that he will have access to secret and confidential information
regarding the Company, including but not limited to its customer list, products,
know-how and business plans. The Executive acknowledges that such information is
of great value to the Company, is the sole property of the Company and has been
and will be acquired by him in confidence. In consideration of the obligations
undertaken by the Company herein, the Executive will not, at any time, during
his employment hereunder and for a period of one year thereafter, reveal,
divulge or make known to any person, any information concerning the Company
acquired by the Executive during the course of his employment that is treated as
confidential by the Company; provided, that such information is not otherwise in
the public domain or information that the Executive could have and did learn
separate and apart from his duties set forth herein; provided, further that
disclosure of said information would not be detrimental to the Company.
Section 9. Covenant Not To Compete.
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(a) The Executive recognizes that the services to be
performed by him hereunder are special, unique and extraordinary. The parties
confirm that it is reasonably necessary for the protection of the Company that
the Executive agrees, and accordingly, the Executive does hereby agree that,
except as provided in Section 9.1(c), he shall not, directly or indirectly, at
any time during the Restricted Period within the Restricted Area (as such terms
are defined in Section 9(d) below), engage in any Competitive Business (as
defined in Section 9(d) below), either on his own behalf or as an officer,
director, stockholder, partner, principal, trustee, investor, consultant,
associate, employee, owner, agent, creditor, independent contractor, co-venturer
of any third party or in any other relationship or capacity.
(b) The Executive hereby agrees that he will not,
directly or indirectly, for or on behalf of himself or any third party, at any
time during the Restricted Period (i) solicit any customers of the Company or
(ii) solicit, employ or engage, or cause, encourage or authorize, directly or
indirectly, to be employed or engaged, for or on behalf of himself or any third
party, any employee or agent of the Company or any of its subsidiaries.
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(c) This Section 9 shall not be construed to prevent the
Executive from owning, directly and indirectly, in the aggregate, an amount not
exceeding one percent (1%) of the issued and outstanding voting securities of
any class of any Company whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market.
(d) The term "Restricted Period," as used in this Section
9, shall mean the period of the Executive's actual employment hereunder plus 6
months after the date the Executive is no longer employed by the Company;
provided, that if the Executive is terminated pursuant to Section 5.4, the term
Restricted Period shall mean the period of the Executive's actual employment
hereunder plus the lesser of (x) 6 months after the date the Executive is no
longer employed by the Company or (y) the number of months the Executive is
entitled to payment under Section 5.4. The term "Restricted Area" as used in
this Section 9 shall mean anywhere in the United States. The term "Competitive
Business" as used in this Agreement shall mean the design, manufacture, sale,
marketing or distribution of (i) branded or designer footwear, apparel,
accessories and other products in the categories of products sold by, or under
license from, the Company or any of its affiliates and (ii) other branded
products related to fashion or lifestyle.
(e) If any of the restrictions contained in this Section
9 shall be deemed to be unenforceable by reason of the extent, duration or
geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Section shall
then be enforceable in the manner contemplated hereby.
(f) The provisions of this Section 9 shall survive the
termination of the Executive's employment as provided hereunder.
Section 10. General Provisions
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10.1 Assignments. Neither the Executive nor the Company may assign
or delegate any of their rights or duties under this Agreement without the
express written consent of the other.
10.2 Entire Agreement. This Agreement constitutes and embodies the
full and complete understanding and agreement of the parties with respect to the
Executive's employment by the Company, supersedes all prior understanding and
agreements, whether oral or written, between the Executive and the Company and
shall not be amended, modified or changed except by an instrument in writing
executed by the party to be charged. The invalidity of one or more provisions of
this Agreement shall not invalidate any other provision of this Agreement. No
waiver by either party of any provision or condition to be performed shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
time or any prior or subsequent time.
10.3 Binding Effect. This Agreement shall inure to the benefit of,
be binding upon and enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted assigns.
10.4 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect any way the meaning or
interpretation of this Agreement.
10.5 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when delivered, sent by registered
or certified mail, return receipt requested, postage prepaid or by private
overnight mail service (e.g. Federal Express) to the party at the address set
forth above or to such other address as either party may hereafter given notice
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of accordance with provision hereof. Notice shall be deemed given on the sooner
of the date actually received or the third business day after sending.
10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to such State's conflicts of laws provisions and each of the parties
hereto irrevocably consents to the jurisdiction and venue of the federal and
state courts located in the Sate of New York, County of New York.
10.7 Counterparts. This Agreement may be executed simultaneously
into two or more counterparts, each of which shall be deemed and original, but
all of which together shall constitute one of the same instrument.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
XXXXXX XXXXXX, LTD.
By: /s/ XXXXXXXX XXXXXX
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Name: Xxxxxxxx Xxxxxx
Title: Chief Executive Officer
/s/ XXXXXXXX XXXXX
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Xxxxxxxx Xxxxx
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